FIU investing Upbit for what may very well be the biggest KYC scandals in crypto historical past

• South Korea’s FIU investigating Upbit for failing to confirm 500,000–600,000 accounts correctly.
• Upbit may face billions in fines for KYC violations beneath South Korea’s legal guidelines.
• The change’s license renewal is delayed because the FIU scrutinizes doable criminality.

South Korea’s Monetary Intelligence Unit (FIU) is probing cryptocurrency change Upbit for what might grow to be one of many largest Know Your Buyer (KYC) scandals within the historical past of the business.

The investigation centres on as much as 600,000 accounts that allegedly did not bear correct verification procedures.

These breaches had been uncovered throughout a routine overview of Upbit’s enterprise license renewal, which has now grow to be something however routine.

Accounts with out correct identification paperwork

The FIU’s intensive overview, which started in late August, uncovered critical flaws within the change’s account verification system. Authorities discovered that many accounts had been opened with unclear or improperly submitted identification paperwork.

In some circumstances, vital particulars corresponding to names and registration numbers had been inconceivable to confirm.

South Korea mandates strict KYC checks to stop prison exercise, together with cash laundering, throughout the crypto market. With out correct identification verification, these accounts may have simply been exploited for illicit functions.

Upbit dangers penalties of as much as billions of gained

If the allegations are confirmed, Upbit, one of many 23 South Korean Exchanges that got here collectively for self-regulation in 2023, may face large penalties.

Below South Korea’s Particular Monetary Transaction Data Act, every violation may lead to fines of as much as 100 million gained (roughly $75,000).

With doubtlessly 500,000 to 600,000 affected accounts in keeping with native sources acquainted with the difficulty, the overall fines may soar into the billions of gained, marking a major blow to the change and the broader crypto business.

The fallout from these violations has already delayed Upbit’s license renewal course of indefinitely. Sometimes a routine process for crypto exchanges each three years, the overview is now mired in uncertainty because the FIU meticulously examines every flagged account for doable criminality.

Within the meantime, Upbit has remained tight-lipped concerning the investigation, citing authorized restrictions on sharing particulars. Nevertheless, the corporate’s obscure statements have solely fueled considerations concerning the severity of the breaches and whether or not they may very well be linked to cash laundering.

Because the investigation continues, the crypto world watches carefully, awaiting the potential penalties of what may grow to be a landmark case in KYC and anti-money laundering enforcement.